Every Little Job Cut Helps: Tesco announces 4,500 cuts as it overhauls Metro stores

August 16, 2019

2 min read

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What's going on here?

Tesco, Britain’s largest private sector employer, has announced 4,500 job cuts in an overhaul of its Metro stores. Shares in the company fell nearly 2% following the announcement in what is a further blow to the retail industry and the high-street.

What does this mean?

Consumers can expect reductions in opening hours and counter service in the coming months because of these job cuts. Tesco states this necessary due to evolving shopping habits and reduced footfall, but this is also a testament to the intense competition among grocery and retail firms at present.

What's the big picture effect?

In spite of 5 years of continual growth and last year’s pre-tax profit of £1.7 billion, Tesco is conscious of the threat of budget rivals. For some time, discount chains Lidl and Aldi have been steadily eroding Tesco’s market share. In response Tesco has made some defensive moves such as these job cuts (earlier in the year they also announced a drive to cut 9,000 jobs). Additionally, Tesco has launched a discount chain called “Jacks” which carries fewer products, most of which are own-brand. In recent times a saving grace for Tesco has been the move by the Competition and Markets Authority to block the proposed merger of rivals Sainsbury’s and Asda. This amalgamation could have created the UK’s biggest supermarket chain, which is currently Tesco’s crown. 

In announcing the current raft of job cuts, Tesco intimated that the employees that remain will have to work more flexibly, performing a variety of roles in a leaner management structure and communicating via headsets. The retail workers’ union USDAW has sounded the alarm about the job cuts and cite them as further evidence of a high street in crisis. Employees and reps alike will likely be concerned that with a leaner management structure there will be fewer well-paid positions. Additionally, with fewer employees on the ground, it may be easier to introduce automated processes.

Of course, these job cuts come a matter of weeks before the UK is set to leave the EU on 31 October 2019 and concerns still abound as to the possibility of no deal. Recently, the UK’s top civil servant Sir Mark Sedwill predicted that a no-deal Brexit could lead to soaring food prices and a shortage of imported fresh produce. It could be that these job cuts at Tesco anticipate a poor performance at the end of the year and only time will tell if this is a prudent move.

Report written by Sam Denison

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